China Investment Corporation, the $1.2 trillion sovereign wealth fund, has established a ESG ‘policy framework’, according to its 2020 annual review.
“In 2020, following a review of peer experience and our own practices, the company formulated an ESG investment policy framework with guiding principles and phase-one plans for advancing sustainable investment,” the organisation wrote.
CIC is one of the world’s largest investors in unlisted infrastructure and real estate, according to rankings from New Private Markets‘ affiliate titles.
The “guiding principles” include integrating ESG factors into decision-making processes; integrating ESG factors “throughout the lifecycle” of investments; and raising awareness and understanding of ESG among CIC’s employees.
“Phase one” involves the actual formulation of sustainable investment policies: “Top-down policy design will guide and support investment practices,” the report states.
The organisation will then: “Weave ESG factors into all investment activities, from project evaluation and selection through due diligence and contracting and on to post-investment monitoring.”
From then the priority will be capturing “ESG-themed investment opportunities”: “We will closely track market developments, identify and analyse commercially viable opportunities for sustainable investments, and invest with conviction.”
Elsewhere in the sovereign wealth universe, the Abu Dhabi Investment Authority’s annual report, which is characteristically light on financial detail, makes some reference to climate change but does not discuss ESG policies.
“The past year saw significant developments in the global discussion on climate change,” wrote managing director Hamed bin Zayed Al Nahyan in the report. “As the world considered how best to address and then recover from the pandemic, it became clear that many people viewed this period as an opportunity to accelerate progress towards a more equitable, cleaner and safer environment.”
The sovereign wealth fund does not publicly disclose its assets under management, but research from New Private Markets‘ affiliate titles ranks the organisation as one of the biggest global investors in private markets, with more than $100 billion invested in real estate, unlisted infrastructure and private equity.
The report adds that the fund has “committed capital to a number of opportunities set to benefit from the move to a lower carbon economy” and continues to participate in the One Planet Sovereign Wealth Fund Working Group.
ADIA’s real estate investment unit has commenced work on identifying the best way of gathering and evaluating data on climate change risks to feed into investment decision making. It has started work on identifying “the most appropriate methodology for obtaining standardised asset level information, through in-house research and discussions with partners, peers and specialist climate change forecast firms”.
Neither CIC nor ADIA score highly on sustainability, according to research from consulting firm Global SWF. The 2021 GSR Scoreboard generated 2,500 data points from 100 of the top state-backed global institutional investors – 70 sovereign wealth funds and 30 public pensions – on a range of ESG-linked topics. In the sustainability category, which assesses 10 different data points, CIC scores five out of 10 and ADIA scores two.